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Page 10 MONEY TALK Wednesday February Maximize the benefits of RSP investment By BRIAN Your is the key to beating inflation saving taxes and ensur ing a financially healthy retire ment But unless you- are taking steps to maximize your con tribution each and every year you are likely cheating yourself out of significant benefits at retirement In order to take ad vantage of taxfree compounding over time it is vital to contribute as much as you can and as early as possible If youre among the many Canadians who have trou ble coming up with cash at time the following strategies might help Consider borrowing the necessary funds for a contribu tion Although interest on loans used to make contributions has not been tax deductible since November 13th the taxes saved on the contribution and on earnings in the RSP will generally more than compensate for the interest paid ScotiaMcLeod is offering loans through our parent com pany the Bank of Nova Scotia at the prime rate Another idea if youre having difficulty coming up with cash is to open a selfdirected plan and make a contribution in kind This means contributing assets rather than cash For example if you presently own Canada Savings Bonds you can use the bonds as a contribution Certain stocks bonds and mutual funds are also eligible When you make a con tribution in kind Revenue Canada considers that you have sold the asset at Its fair market value although you really havent Any resulting capital gain will be subject to tax depen ding on the availability of your capita gains exemp tion However any capital loss cannot be claimed You should therefore think twice before transferring assets with accrued losses to your There is a good reason for en suring that you can make your maximum allowable contribution this year Proposed pension reform would allow unused contributions to be carried for ward for up to seven years Therefore if you could only make half of your allowable contribu tion you would be able to add the unused portion to a future years contribution within the seven year period Under current legislation if you do not con tribute the maximum amount to your in any one year you will not be able to make up the difference at a later time This Dollars and Sense by Brian Slessor Trust plan geared to attract youngsters A new savings account and depositors club for younger peo ple has been developed by Municipal Trust Known as the Future 1st Rate Savers Account the savings account was designed specifically for the needs of younger customers up to and in cluding 16 years of age While the primary customer group for Municipal Trust are those financial consumers who are aged or more we still have many other customers from all age groups including younger people according to Robert Stewart VicePresident of Marketing for Municipal Trust We wanted to develop a package for children that would make banking exciting for them as well as informative Stewart said It is important to treat younger customers favourably as they will become the customers of Municipal Trust in the future The Future 1st Rate Savers Ac count is simple to understand There are two levels of interest with very competitive interest rates Interest is calculated daily and paid monthly There are no service charges A Future 1st Rate Savers Ac count can be opened by a child up to age 16 The account can also be opened by an adult in trust for a child In all cases the account bolder receives a special orange neon coloured passbook to keep track of their savings and in terest as well as a special pro spectors poke bag to store their entitles them to purchase in vestment for as low as Municipal Trust has plans to expand the features of the Golden Nugget Club All 26 Municipal Trust bran ches are ready to open these ac counts for its younger depositors Further details are available by calling any one of the branches Municipal Trust is a subsidiary of Municipal Corpora tion which has over billion dollars in assets and head quarters in Ontario Municipal Trust offers a full range of financial services from its branches located throughout Ontario results in a permanent loss to future retirement benefits Beginning in investors can carry forward unused con tributions from one year to the next for up to seven years because the purpose of an RSP is to facilitate the ac cumulation and growth of assets over time delaying contributions is not an effective strategy This provision will help some in dividuals in years when they simply cannot make a contribu tion Generally for taxation years ending on or before total contributions exceeding were subject to a penalty tax of per month on the amount over Overcontributions could be withdrawn taxfree in the year in which the tax return giving rise to the overcontribution is assessed or in the following year Any withdrawal of excess con tributions after this period was subject to tax The government has establish ed a new lifetime overcontribu tion limit of As the law provides for indefinite carryfor ward of undeducted contribu tions it is possible to reduce the contribution that would otherwise be made in a later year and claim the earlier contribution Therefore no double tax would result Double tax would arise if the amount is not deducted as all withdrawals except as noted above from the are tax able It is important that clients reduce regular contribu tions as they approach retire ment so that by the time they retire there will be no more ex cess contributions in the Associate Tax Consultants INCOME TAX RETURNS DONE Friday Saturday 900am530 pm 900 am 700 pm 900 am300 pm To add extra excitement we also created the Golden Nuggets Club for our younger savers and to join all they have to do is open a Future 1st Rate Savers Ac count stated Mr Stewart Members of the Golden Nuggets Club receive a personalized membership card which current- 101 GUELPH ST GEORGETOWN 8772217 WE ARE FULLY COMPUTERIZED The earlier ihe is con tributed in the life of the the more taxdeferred income can be earned on those funds up until retirement when they are withdrawn from the plan Another way to maximize contributions is to contribute as early as possible in a given calen dar year By making your annual contribution in January of each year rather than waiting till the end of February of the following year your assets would en joy extra months of tax- deferred growth every year This can mean a difference of thousands of dollars over time For more information on call Brian and ask for a copy of his free booklet cessfulRSPInvesting Brian Slessor an investment executive with Any questions should be directed to him and he can be reached at 416 8632825 If outside Toronto please call PERSONALIZED SERVICE From Proven Financial Insurance Professionals See us today tor all your Fi nancial Insurance needs Our experienced profession als will take the time to sit down with you and ex plain your options while providing you answers to any questions RRSPs Competitive Interest Rates Group Plans Available Flexible Life Disability Insurance Plans BARKER HENLEY LTD 72 Main St Georgetown 8772214 AGF ASSET ALLOCATION Get Oft The Investment rollercoaster Volatility friability Ups and Downs Call it what you will investing often seems to be a rollercoaster ride A ride that costs you money and reduces your returns Many financial advisors agree that the best way to maxi mize long term return is by shifting your asset mix among cash stocks and bonds The problem is timing How much should be in each asset type When should the mix change AGFs Asset Allocation Service provides objective answers The Service is based upon a computer model developed by a major U S brokerage firm for determin ing asset allocation Find out how it works and get off the investment rollercoaster Give us a call MONEY CONCEPTS FINANCIAL PLANNING 348 GUELPH STREET GEORGETOWN A CM A ltd Awl